Smucker Reports Sales Decline

J.M. Smucker Co. said price deflation hurt sales in its latest quarter, though the packaged-food company said cost cuts would help it meet its full-year earnings target.

Following the disappointing quarterly sales result, the stock fell 4.1% to $149.80 in premarket trading.

Like other food companies, the Ohio maker of its own brands of jams and peanut butter, as well as Pillsbury pastries and Folgers coffee, has contended with consumers' shift away from packaged goods and toward more fresh and natural options. But as investors have looked favorably on dividend-yielding stocks amid ultralow global interest rates, Smucker's stock had climbed 27% this year through Monday's close.

In recent moves to diversify its business and respond to changing consumer preferences, Smucker last year bought Big Heart Pet Brands for about $3.2 billion, and in November agreed to sell its canned-milk business.

On Tuesday, the company attributed the 7% decline in fiscal first-quarter revenue to lower prices and said the divestiture of its milk business and a disappointing performance in its pet foods segment—where sales fell 5.5% from a year earlier—contributed to the pressure.

"Despite the impact of deflation on the top line, we remain on track to achieve our original expectations for full-year earnings per share," said Chief Executive Mark Smucker, adding that cost cuts are helping to support Smucker's bottom line. In the most recent period, selling, distribution and administrative expenses decreased 8.2%.

In all for the quarter, the company reported a profit of $170 million, or $1.46 a share, up from $136.4 million, or $1.14 a share, a year earlier. Excluding certain items, and helped by a lower share count, earnings per share rose to $1.86 from $1.60.

Revenue fell to $1.82 billion from $1.95 billion. Analysts polled by Thomson Reuters had expected adjusted earnings of $1.74 a share and $1.89 billion in sales.

For the year ending in April 2017, Smucker continues to project $7.60 to $7.75 in adjusted earnings per share, bracketing the average analyst estimate of $7.70.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

August 23, 2016 08:35 ET (12:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.